Chapter - ICSI - The Institute of Company Secretaries of · Web viewII Rule 2.4 The third criterion in this Rule, namely “the close of the financial year during which its balance

ICSI Suggestions on First tranche of the draft rules under Companies Act, 2013:-

Chapter PARTICULAR SUGGESTION TYPE

SUGGESTION JUSTIFICATION

II Rule 2.4

The third criterion in this Rule, namely “the close of the

financial year during which its balance sheet total exceeds

one crore rupees” may be incorporated also in the sub-rule

(1) of Rule 2.4 for reasons of uniformity in criteria.

Alternatively, this third criterion may be omitted from Rule

2.4 (2). An authentic figure of turnover for the immediately

preceding financial year would be available at the end of

audit, normally after three months from the close of the FY.

Hence, it is presumed that the period of six months

mentioned in Rule 2.4 (2) would commence from that date

when the authentic figure of ‘turnover’ is available- say with

effect from 1st July following the close of the immediately

preceding FY. This presumption may please be confirmed by

MCA by way of clarification.

Re-draft The criteria for balance sheet total of Rupees one Crore either be deleted from Rule 2.4(2) or it should be included in Rule 2.4(1).

Rule 2.4(1) & Rule 2.4(2), seem to be in contradiction to each other and should be suitably modified.

II 2.5 Undesirable names (4) In case the key word used in the name proposed is the

Re-Draft First sentence needs redrafting as under: “In case the name proposed

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name of a person other than the name(s) of the promoters or their close blood relatives, No objection from such other (s) shall be attached with the application for name. In case the name includes the name of relatives, the proof of relation shall be attached. It shall be mandatory to furnish the significance and proof thereof for use of coined words made out of the name of the promoters or their relatives.

(5) The applicant shall declare in affirmative or negative ( to affirm or deny ) whether they are using or have been using in the last 5 years , the name applied for incorporation of company or LLP in any other business constitution like Sole proprietor or Partnership or any other incorporated or unincorporated entity and if, yes details thereof and NOC from other partners and associates for use of such name by the proposed Company or LLP as the case may be and also a declaration as to whether such other business shall be taken over by the proposed company or LLP or not .

contains the name of a person other than those of the promoters, no objection certificate from such person shall be attached to the application seeking availability of names.”

Please expand the acronym “NOC” to ‘No Objection Certificate’

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II Rule 2.5 (6):

(6) For the purposes of clause (b) of sub-section (3) of section 4, the following words and combinations thereof shall not be used in the name of a company in English or any of the languages depicting the same meaning unless the previous

(n) Financial, forest, Corporation and the like (o) Municipal (p) Panchayat (q) Development Authority; (r) Prime Minister or Chief Minister (s) Minister (t) Nation (u) Forest corporation (v) Development Scheme (w) Statute or Statutory (x) Court or Judiciary (y) Governor

Re-Draft 1. It should be clearly defined in the rules what does the term Central Government means exactly for the purposes of various rules. For example for section ……… rule ………, Central Government means Registrar of Companies and for section ……….. rule …………, Central Government means the Regional Director.

2. In sub-rule (6), the item (n) containing the words “Financial, forest, Corporation and the like” may be deleted as item (u) covers forest corporation.

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(z) Development Scheme or the use of word Scheme with the

name of Government (s) , State , India,

The word ‘Financial’ will, in any way, be controlled or regulated by RBI, through the Registrar of Companies

3. Delete item (v) as it already covered under item (z) .

II 2.10(1) Signing of Memorandum and Articles

(1) Memorandum and articles of association of the company shall be signed by each subscriber to the memorandum, who shall add his name, address, description and occupation, if any, in the presence of at least one witness who shall attest the signature and shall likewise sign and add his name, address, description and occupation, if any. The witness shall state that “I witness to subscriber/subscriber(s). who has/have subscribed and signed in my presence (date and place to be given). Further I have verified his/their ID for their identification and satisfied myself of his/her/their identification particulars as filled in.

Redraft Section 7(1)(a): Rule 2.10: the words “memorandum” and “articles” should be in small letters so as to maintain consistency.

In rule 2.10 (1), in third line and sixth line it should be name, description, address and occupation. In other words, “address” should come after “description.”

In rule 2.10 (1) following sentence has to be

- M and A has to be in small letters for Memorandum and Articles as this is the scheme followed in the Act also.

- It has to be name, description, address, and occupation, in that order.

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deleted as it is not required:-

“if any. The witness shall state that “I witness to subscriber/subscriber(s). who has/have subscribed and signed in my presence (date and place to be given). Further I have verified his/their ID for their identification and satisfied myself of his/her/their identification particulars as filled in.”

It is not required. The signature by witness implies that subscribers to the memorandum have signed in his presence and that he verifies identification of the subscribers.

II 2.13 (1) Particulars of every subscriber to be filed with the Registrar at the time of incorporation (1) (i) Email id of Subscriber (j) Mobile No. of Subscriber (k) Phone No. of Subscriber (l) Fax No. of Subscriber.

Re-draft All the particulars specified in sub-rule (1) can be provided in a separate form instead of making rules.

After item (a) the following item has to be added:

“Director Identification number (DIN), if any”.

Instead of the rules these particulars should come in a separate form so that it can be modified by ROC depending upon the change in circumstances happening from time to time. Nicely designed form will do this job

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Under item (i), (j) (k) and (l) the word “if any” has to be added

Under item (m) after proof of identity insert the following:

“copy of the following documents to be furnished”

Under item (n) the word “AND” should come in small letters

Under item (p) full form of MOA and AOA should be given.

better.

II Rule 2.16 (4)

(b) a declaration in Form No. 2.15 by an Advocate, a Chartered Accountant, Cost Accountant or Company Secretary in practice, that the draft memorandum and articles of association have been drawn up in conformity with the provisions of section 8 and rules made thereunder and

Re-Draft (1) The following words should come in alphabetical order as under unless there is a justification for the same:

“an Advocate, a Chartered Accountant, Company

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that all the requirements of the Act and the rules made thereunder relating to registration of the company under section 8 and matters incidental or supplemental thereto have been complied with;

Rule 2.16 (4) (f)

The words ‘where applicable/available’ may be added at the

Clarity

Drafting

Secretary or Cost Accountant in practice”

(2) The following words should be deleted as they are redundant:-

“relating to registration of the company under section 8 and matters incidental or supplemental thereto”

Suggestions on rule 2.16(4) (c) & (d):

Sub-rule 4 (c) and 4 (d) appear to be similar. One item has to be deleted or clarity should be provided.

Suggestions on rule 2.16(4) (f):

Under sub-rule (4) (f) the following words may be added at the end:-

“where the subscriber is a Board resolution or

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end of clause (f) that requires a copy of the board resolution

or members’ resolution to be annexed to the application

referred to therein.

company” member resolution is required only in case of a company

II 2.21 Declaration at the time of commencement of business Provided that in the case of a company requiring registration and/or approval from other regulators or professional body which regulates such professional activity, the declaration referred above shall also be accompanied with a certificate of registration/Approval issued to it by the concerned regulator, or professional body.

Re-Draft C and R has to be in capitals for Certificate and Registration

II 2.22 Verification of registered office

(b) Notarized copy of lease / rent agreement in the name of the company along with a copy of rent paid receipt not older than one month;

Re-Draft Under sub-rule (2) (a) the word “or” should be deleted at the end

Under sub-rule 2(c), the

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(c) Authorization from the owner or authorized occupant of the premises along with proof of ownership or occupancy authorization, to use the premises by the company as its registered office.

word “AND” must be deleted at the end.

Sub rule 2(d), should be reworded as under:-

(d) Document of connection, not older than 2 months, of any utility like telephone, gas, electricity, etc. depicting the address of the premises in the name of the owner

II 2.25 Shifting of registered office within the same State

(2) clearly indicating the matter of application and stating that any person whose interest is likely to be affected by the proposed alteration of the memorandum may intimate his nature of interest and grounds of opposition to the Regional Director with a copy to the company within twenty one days of the date of publication of that notice:

Re-Draft Suggestions on rule 2.25(2):

Under sub-rule 2 (a) in the last line “;” (semi column) should be inserted after the word “district”

II 2.26 Alteration of Memorandum by Change of name Re-Draft The heading of the rule

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Change of name shall not be allowed to a company which has defaulted in filing its Annual Returns or Financial Statements or any document due for filing with the Registrar or which has defaulted in repayment of matured deposits or debentures or interest on deposits or debentures.

should be as under:

“Alteration of Memorandum consequent to change of name”

In the first line of the rule the words “Change of name shall not be allowed to a company which” should be replaced by the following

“The name of a company shall not be changed in case it”

II 2.27 Shifting of registered office from one State to another State

2.27. (1) An application under sub-section (4) of section 13, for the purpose of seeking approval for alteration of memorandum with regard to the change of place of the registered office from one State to another, shall be filed with the Central Government in Form No. 2.28 along with the fee as provided in Annexure ‘C’ and shall be accompanied by

Re-Draft Under sub-rule (1), in 4th

line instead of the word “Central Government” actual authority like Regional Director must be specified.

MCA may please specify the actual authority like RD instead of stating ‘Central Government’ and leaving the matter to be decided by a circular/notification.

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the following documents:

(1) (g) Affidavit verifying the list of creditors

(h) Bank draft evidencing payment of application fee.

(i) Copy of Board Resolution or the executed Vakalatnama, as the case may be.

(2) (a) the names and address of every creditor and debenture holder of the company; (b) the nature and respective amounts due to them in respect of debts, claims or liabilities:

Drafting

Drafting

Drafting

Drafting

Under sub-rule (1) (g) the words “and debenture holders” must be added after the word “creditors”.

Under sub-rule (1) (h) the words “bank draft evidencing” should be replaced with the words “proof of”

Under sub-rule (1) (i) the following words should be added after the words Vakalatnama :

“power of attorney”

Under sub-rule (2) (a):

- “s” has be to removed from the word “names”.Under sub-rule (2) (b):

- Delete from “in respect

To make it consistent with rule 2.25(2)(b)

-

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(3) There shall also be attached to the application an affidavit from the directors of the company that no employee shall be retrenched as a consequence of shifting of the registered office from one state to another state.

(4) A duly authenticated copy of the list of creditors shall be kept at the registered office of the company and any person desirous of inspecting the same may, at any time during the ordinary hours of business, inspect and take extracts from the same on payment of a sum not exceeding ten rupees per page to the company.

(6) The company shall at least 14 days before the date of hearing: (b) serve, by registered post with acknowledgement due, individual notice(s), to the effect set out in clause (a) above on each debenture-holder and creditor of the company; and

Drafting

Drafting

Needs clarity

Drafting

of debts, claims or liabilities” in second point.

Under sub-rule (3) :

In the second line “ a director “ has to be written instead of “the directors”.

Under sub-rule (4):The expression “any person desirous of inspecting the same” needs clarity.

In Sub-rule (6) (b) and (c): insert the words “speed post” after the words registered post with acknowledgment due”

Speed post is a recognised mode of post and is well in use.

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(8) Where no objection has been received from any of the parties, who have been duly served, the application may be put up for orders without hearing.

(9) Before confirming the alteration, the Central Government shall ensure that, with respect to every creditor and debenture holder who, in the opinion of the Central government, is entitled to object to the alteration, and who signifies his objection in the manner directed by the Central government, either his consent to the alteration has been obtained or his debt or claim has been discharged or has determined, or has been secured to the satisfaction of the Central Government

Drafting

Drafting

Under sub-rule (8) :

In the second line after duly served, “the same shall be notified by the applicant and” has to be added.

Under sub-rule (9),

In the second last line the words “discharged or has determined” should be read as “discharged or determined”

II 2.31 Copies of memorandum and articles, etc. to be given to members on request being made by them.(2) the articles, if any;

Re-Draft “if any” has to be deleted or clarity should be provided

II 2.32 Service of documents.(2)(a) (ii) posting of an electronic message board or network

Re-Draft Under sub-rule (2) (a) (ii), in first line, the words

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that the company or the officer has designated for such communications, and which transmission shall be validly delivered upon the posting; or

“posting of” has to be replaced with the words “posting on”.

VI 6.1 Registration of creation or modification of charge.(1) Provided that if the company fails to register a charge within the period of thirty days of its creation, the particulars of the charge together with a copy of the instrument, if any, creating or modifying the charge may be filed by the charge-holder, in Form No. 6.1 duly signed by him along with additional fee as specified in Annexure ‘B’

Re- Draft In the second line after the word “creation” the word “or modification” has to be inserted.

Form 6.1Space should be there for digitally signing the form 6.1 by Professionals.

VI 6.8 Company’s register of charges.(3) Entries in the register shall be authenticated by the secretary of the company or any other person authorised by the Board for the purpose.

Re- Draft In sub-rule (3), the words “a director of the company or” has to be inserted after the word “authenticated by”

Director is also competent to sign such register

VI Rule 6.1 (3) (f) Clarify

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‘Floating charge’ may be defined/elaborated for removal of

doubts in this regard.

VI Rule 6.10

The delegated authority may be specified.

Re-Draft Specify Regional Director, Registrar or MCA; who will be the authority.

VIII Rule 8.3:

This rule may be relaxed for private companies and other

small companies which cannot afford to maintain a website.

They may be required to host the details of unpaid dividend

transferred to Unpaid Dividend account on a dedicated portal

in the MCA website or other website set up by MCA, using

the Investor Education & Protection Fund, if need be. Also,

the word ‘and’ between the words ‘its website and ‘on any

other’ may be changed to ‘or’ so that the companies may

Re-draft Under sub-rule (1), in fourth line insert “if any” after website

A company may or may not have a website. Further the word “if any” has been used under the Act also wherever website has been used.

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host the details only on one website.

VIII Rule 8.7 (2)(e) :

In addition to succession certificate, probate etc the “Will”, if

any, of the deceased may also be included to ease the

difficulties of the claimant

Re-draft Under sub-rule (2) (e),the word “Will” must be added after the word “succession certificate”

VIII 8.5 Manner of transfer of shares in respect of which unpaid or unclaimed dividend has been transferred under sub-section (6) of section 124(10) For the purposes of rule 8.9, the company shall inter alia verify the following documents of the claimants: (i) Documents for identification (Any two of the following): Income-tax permanent account number

Voter’s identity card number

Passport number

Driving License

Unique Identification Number (UIN)

Re- Draft The documents must be either self-attested by the claimants or notarized.The word “number” must also be deleted from Income-tax Permanent account number, voter identity card number and passport number

VIII Rule 8.51. As per Section 124, company is required to transfer all the shares in respect of which unclaimed/unpaid dividend has been transferred to IEPF. However, co. need not to transfer, where the shareholder, whether holding shares in DEMAT OR

ClarifyUnder sub-rule (1), in the sixth line after the words “held in” insert the words “whether physical mode

1. As per Section 124, company is required to transfer all the shares in

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IN PHYSICAL FORM (physical mode is missing), has encashed any dividend warrant during the last seven years. 2. extra burden is being imposed to the company especially where the shareholders are holding just one or two shares. 3. for the purpose of share transfer to IEPF, specific format of delivery instruction slips/securities transfer deeds should be available on MCA website. 4. Where MCA issues any share certificate, upon receipt of a claim request from shareholder and after all verifications, then the company should also be informed of the same. 5. Documents like identity proof etc. should either be self attested or notarized

or”

In seventh line insert the words “shareholder or” before the words “beneficial owner”

respect of which unclaimed/unpaid dividend has been transferred to IEPF. However, company need not transfer, where the shareholder, whether holding shares in DEMAT OR IN PHYSICAL FORM (physical mode is missing), has encashed any dividend warrant during the last seven years.

IX Rule 9.1 (2):

The expressions “complete and unaltered” at the end of sub-

rule (2) should be explained/elaborated

Clarify Under sub-rule (2), the expressions “complete and unaltered” at the end of sub-rule (2) should be explained/elaborated

IX Rule 9.1 (4):

(4) There is a proper system for storage, retrieval, display or

printout of the electronic records and no such records shall

Clarify Under sub-rule (4), the words “there is” should be changed to “there should be”

The expression “proper

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be disposed off or rendered unusable, unless permitted by

law.

system for storage” at the commencement of sub-rule (4) needs to be explained / elaborated

IX Rule 9.5 (6) :

The word ‘adoption’ be substituted for ‘approval’ in the

expression ‘date of approval’ so as to synchronise with the

expression ‘adoption’ used in sub-rule (5). The members also

felt unanimously that the expression ‘adoption’ is more

appropriate than ‘approval’ in the given context.

Re-Draft Under sub-rule (6), in the last line words “approval by” should be “changed to “adoption by”

To synchronise with the expression ‘adoption’ used in sub-rule (5).

IX Rule 9.8 (5):

For the words ‘general meeting’ substitute ‘immediately

succeeding general meeting’. This sets a time limit (which is

now absent) for approval of general meeting. The meeting

also desired changing the language of sub-rule (5) as follows:

“The approval for the revised financial statements along with

Re-draftUnder sub-rule (5), “The approval for the revised financial statements along with the revised auditor’s report shall be obtained at the immediately succeeding general meeting”.

This is intended to take

away the objectionable

mandate of approval

issued to the company’s

members through the

present wording, namely

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the revised auditor’s report shall be obtained at the

immediately succeeding general meeting”.

“The members shall

approve”.

IX Rule 9.13: Re-Draft 1. To substitute the words

‘such other companies’ in

place of ‘such public

companies’ in Rule 9.13.

2. Further financial statements may be sent through electronic mode to all the shareholders by the concerned companies. In case, there is any specific request from the shareholder a physical copy can be sent to such shareholder.

This is to make 9.13 apply to all companies (including private companies) satisfying the criteria of net worth, turnover etc laid down in the rule.

This is to ensure the benefit of green initiative which the MCA is adopting through E-governance.

IX Rule 9.13In case of securities held in demat form, companies should be allowed to send financial statements to the email ids registered by the security holders with their Depository Participants.

others In case of securities held in demat form, companies should be allowed to send financial statements to the email ids registered by the

This is to ensure the benefit of green initiative which the MCA is adopting through E-governance.

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security holders with their Depository Participants.

IX 9.15 (1) For the purpose of sub-section (1) of section 138 of the Act, the following class of companies shall be required to appoint an internal auditor or a firm of internal auditors:- (a) every listed company (b) every public company having paid up share capital of Rupees ten crores or more; (c) every other public company which has any outstanding loans or borrowings from banks or public financial institutions exceeding twenty five crore rupees or which has accepted deposits of twenty five crore rupees or more at any point of time during the last financial year.

(2) For the purpose of sub-section (2) of section 138 of the Act, the Audit Committee of the company or the Board shall, in consultation with the Internal Auditor, formulate the scope, functioning, periodicity and methodology for conducting the internal audit.

Re-Draft In sub-rule (1), suitable turnover criteria must also be specified.

In sub-rule (1) (c ) in the last line “last financial year” should be changed to “preceding financial year”

With regard to sub-rule (2), under removal of difficulties section 470, It should be clarified whether the internal audit done by an in-house internal department of the company is sufficient to meet the requirement or an external agency needs to be hired.

- It is more appropriate to include turnover criteria. A company may have a paid up capital of Rs. 10 lakh only and have a turnover of Rs. 1000 crore. High turnover justifies the need of internal audit.

Several companies have in house audit team headed by their own staff. It should be clarified whether it has to be done by internal or external employees.

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IX Part II – Rule 1 This rule provides that the CSR Policy formulated by the CSR Committee should contain list of projects to be undertaken during the implementation year.

Clarify Section 135 : This would entail that a CSR Policy would be required to be formulated on an annual basis. The CSR Policy should contain broad framework of the CSR projects to be undertaken and not specific details.

A Policy is essentially a guidance document and need not be redrafted every year.

X Rule 10.1(1):

Insert the words “record of professional ethics and

organizational support” after ‘’experience’ as parameters to

be considered for selection of Auditor. This addition is

despite consideration – provided in the second para relating

to disciplinary proceedings (completed and/or pending). The

suggested criteria will cover also those who are free from

such proceedings.

Re-draft Rule 10.1(1):

Under sub-rule (1) in third line, Insert the words “record of professional ethics and organizational support” after the word ‘’experience’’ as parameters to be considered for selection of Auditor. This addition is despite consideration – provided in the second para relating to disciplinary proceedings (completed and/or pending). The suggested criteria will cover also

The suggestion will cover also those who are free from disciplinary proceedings as provided in second para to rule 10.1(1).

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those who are free from such proceedings.

X 10.4 Manner in which the companies to rotate their auditors on the expiry of term(1) The audit committee of a company, constituted under Section 177 of the Act shall recommend to the Board, the name of individual auditor or the audit firm who may be rotated in the place of the present incumbent on the expiry of his or their term.

Re-Draft in the second last line the words “rotated” may be changed to “appointed”

X Rule 10.4 (2):

The expression “General Meeting” may be substituted with

the expression “Annual General Meeting”.

Re-draft Under sub-rule (2), in the second last line the word “general meeting” may be changed to “annual general meeting”

It is necessary to make it consistent with sub-rule (3)

X Rule 10.4 (5):

The mode by which ‘all the joint auditors do not complete

their term in the same year’ needs to be elaborated by an

explanation for example. It was not clear whether such joint

auditors would require to be appointed in

different/successive years to comply with the requirement of

completing their respective terms in different years.

Clarify needs clarity

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X Rule 10.8 (b):

The expressions ‘foreseeable losses’ (including the manner of

quantification since the provision for it needs to be

examined) and ‘long term’ need to be elaborated for

providing the requisite guidance to discharge this onerous

responsibility properly and adequately.

Clarify Under rule 10.8 (b), the words “foreseeable losses” and “long term contracts” needs clarity and must be properly explained

X Rule 10.10:

The auditor Government about fraud in the company within

thirty days of his knowledge or information. The manner in

which the date/time of such knowledge /information can be

verified needs to be set out by way of an explanation for

guidance of the auditors and of the Government itself.

Likewise the expression ‘systemic issues’ used in 10.10 (3)

may also be elaborated for the guidance of all concerned.

(includes the Cost Auditor and the Secretarial Auditor) is

Needs clarity Sub-rule (1) needs clarity. The manner in which the date/time of such knowledge /information can be verified needs to be set out by way of an explanation for guidance of the auditors and of the Government itself

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required to report to the Central.

X Rule 10.10 (6):

The expression ‘Auditor with his seal’ may be changed to ‘Auditor with his seal affixed thereon’ for purposes of Clarify of language. This will differentiate it from a situation where a person may sign with his seal (like a company signing with its common seal) in lieu of separate signature

Drafting In sub-rule (6), the expression ‘Auditor with his seal’ may be changed to ‘Auditor with his seal affixed thereon’

X Rule 10.11 (b):

This may be reworded as follows for better order: “the

remuneration recommended by the Audit Committee shall be

subject to consideration and approval by the Board of

Directors and confirmation subsequently by the

shareholders”.

Drafting Sub-rule (1) (b), should be

reworded as under “The

remuneration

recommended by the

Audit Committee shall be

subject to consideration

and approval by the

Board of Directors and

confirmation

subsequently by the

shareholders”.

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XI Rule 11.3:

The rule to be renumbered as 11.3.

The members of the Working Group expressed their unhappiness at the absence of any specific reference to the Company Secretarial profession in the list of qualifications of independent director in Rule 11.3. The Group is no doubt aware that the qualifications of law include company law and the word corporate governance includes a Company Secretary under its wings. Yet, the Group felt that a direct reference to Company Secretarial profession (which has emerged as a distinct corporate profession) may be considered

Re-draft

In third line, after the word, “finance” insert the word “company secretaryship”.

Specific reference to the Company Secretarial profession in the list of qualifications of independent director in Rule 11.3 (which has emerged as a distinct corporate profession) may be considered A Company Secretary is very much competent to become an Independent director.

XI Number of independent directors. 11.2. For the purposes of sub-section (4) of section 149, the following class or classes of companies shall have at least one-third of the total number of its directors as independent directors:- (i) Public Companies having paid up share capital of one

Other public companies having a paid up share capital of Rs. 5 crore or more shall be required to have minimum 2 Independent Directors.

This is required as it is also suggested that companies having a paid up share capital of Rs. 5 crore or more must constitute an audit committee, on the lines

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hundred crore rupees or more; or

(ii) Public Companies having turnover of three hundred crore rupees or more; or (iii) Public Companies which have, in aggregate, outstanding loans or borrowings or debentures or deposits, exceeding two hundred crore rupees. Explanation: - The criteria specified under sub-rule (i) to (iii) shall be applicable for the first year and shall continue to apply to that company in subsequent years during the tenure of the Independent Director even if the paid up share capital or turnover, or borrowings/deposits, as the case may be, fall below the limits specified therein.

Provided that a company belonging to any class of

companies for which a higher number of independent

directors has been prescribed in or under the law/regulations

governing such class of companies, shall comply with the

requirements specified in such law/regulation.

of existing provisions of the Companies Act, 1956.

XI Rule 11.4 (2) (p)(iii)

Re-draft

Under sub-rule (2)(p) in item (iii) “Managing director” may be added after the words ‘Nature of

It is suggested to include Managing Director.

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Against ‘Nature of directorship’ – the word ‘Managing

Director’ may be added since the existing designations set

out therein, namely Executive/Non-executive etc do not

cover the position of Managing Director whose

office/position is not time-related in a company, either office-

time wise or working hours wise, under the Companies Act.

directorship’

XI Rule 11.13 The rule says that where a director resigns from his office, he may within 30 days of resignation, forward to the Registrar, a copy of his resignation, along with reasons thereof. The proviso to sub-section (1) of Section 168 provides that a director who has resigned shall forward a copy of his resignation to the Registrar within 30 days of resignation.

Therefore the Rule11.13 should also use the word ‘shall file’ instead of ‘may file’.

Drafting In second line replace the word “may” with “shall”.

Further no fee should be charged from a director for filing the form as the company is already paying it.

To bring consistency and to align with the Act. The word “may” used in the rules not in consonance with proviso to section 168(1) of the Act.

There should be no double fee.

XI 11.14 Register of directors and key managerial personnel.(1) (a) Director Identification Number;

Re- Draft In sub-rule (1)(a), after Director Identification Number add “if any”

A KMP may or may not have a DIN.

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Rule 11.14 (1) (I)

To insert “in the last five years” after the words

“Relinquished ” to provide a time limit.

In sub-rule (1)(l), after the word “relinquished” add the words “during the last 5 years”

Time limit must be provided.

XII 12.1. For the purposes of sub-section (2) of section 173, a

company shall comply with the following requirements and

procedures, in addition to the procedures required for Board

meetings in person, for convening and conducting Board

meetings through video conferencing or other audio visual

means:

(3) (c) A director intending to participate through video

conferencing mode or other audio visual means shall

communicate his intention in writing to the Chairman and/or

the company secretary of the company and shall also furnish

details of how he wishes to avail the connectivity.

Drafting

In sub-rule (3)(c), replace the words “chairman and/or” with “chairperson or”

At other places in rules and in the Act, the word chairperson is used

XII 12.1. (9) From the commencement of the meeting until the conclusion of such meeting, no person other than the Chairperson, directors, Secretary and any other person whose presence is required pursuant to a legal provision shall

In sub-rule (9), add the following proviso: “No person other than those required to have presence

28




be allowed access to the place where any director is attending the meeting either physically or through video conferencing or other audio visual means.

pursuant to a legal provision shall be allowed access to a meeting of board or committee, as the case may be, without prior approval of board or committee.”

XII 12. (1) (10) (a) At the end of the meeting, the Chairperson of

the meeting shall announce the summary of the decisions

taken in that meeting in respect of each item of business

transacted at the meeting and the names of the directors

who have assented to or dissented from those decisions. The

video recording of this part of the meeting shall form part of

the secretarial records and be preserved by the company.

Drafting

In sub-rule (10)(a), at the last insert the following words:

“for a period of one year from the date of the meeting”

The existing circular of MCA provides a period of 1 year in this regard

XII Committees of the Board. 12.4. Pursuant to the provisions of sub-section (1) of section 177 and sub-section (1) of section 178, the Board of directors of the following classes of companies shall constitute an Audit Committee and a Nomination and Remuneration Committee of the Board:

Rule 12.4 should be segregated in 2 parts. Separate rules should be framed for section 177 and section 178 i.e.

Existing governance standards should not reduced.

29




(a) every listed company; (b) every other public company – (i) having paid up capital of one hundred crore rupees or

more; or

(ii) which have, in aggregate, outstanding loans or borrowings

or debentures or deposits exceeding two hundred crore

rupees.

constituting of audit committee and nomination and remuneration committee. Standards for constitution of nomination and remuneration committee are fine. As regards audit committee, the provision as existing in the Companies Act, 1956 Act i.e. Rs 5 crore should be continued unless we have evidence that it has not served the purpose.

XII Powers of Board. 12.6. For the purposes of clause (k) of sub section (3) of section 179, the following powers of the Board of directors shall be exercised only by means of resolutions passed at meetings of the Board, namely :- (1) to make political contributions;

Others Rule 12.6 may be dropped at this moment due to the following reasons:

(i)Micro-management should be avoided

(ii) Why make it restrictive as most of the items have

30




(2) to fill a casual vacancy in the Board;

(3) to enter into a joint venture or technical or financial collaboration or any collaboration agreement;

(4) to commence a new business

been covered in the substance in the section 179(3) of the Act.

XII Rule 12.7 (3) :

The companies may be permitted to keep also scanned

copies of such notices, instead of physical copies, in view of

increasing cost of office space in towns and cities where most

of the registered offices of the companies are situate. There

is also the advantage of keeping additional/extra CDs/Discs

being kept at another location to be retrieved in the event of

any fire accident at the registered office.

others

In sub-rule (3), the

companies may be

permitted to keep also

scanned copies of such

notices, instead of

physical copies, in view of

increasing cost of office

space in towns and cities

where most of the

registered offices of the

companies are situate.

All books or papers shall be preserved in paper or in electronic form.

31




There is also the

advantage of keeping

additional/extra CDs/Discs

being kept at another

location to be retrieved in

the event of any fire

accident at the registered

office.

XII

Rule 12.10

If the applicant so chooses, the company may be permitted

to give such extracts electronically on a CD. If acceptable to

MCA, Rule 12.10 may be amended suitably.

Needs clarity

Others

Section 186 (2) Under removal of difficulties i.e Section 470, it should be clarified that limits under sub-section (2) are the aggregate limits.

If the applicant so chooses, the company may be permitted to give such extracts electronically on a CD. If

Electronic form of maintaining the Register is recognized by Se. 2 (36).

32




acceptable to MCA, Rule 12.10 may be amended suitably.

XII 12.11(2) A resolution passed at a general meeting in terms of sub-section (3) of section 186 to give guarantee may specify the total amount up to which the Board of Directors is authorised to give guarantee; Provided, that the company shall disclose to the members in

the financial statement the full particulars of the guarantee

given and the purpose for which the guarantee is proposed

to be utilised by the recipient of the guarantee.

Needs clarity Though the provision of sub-rule (2) is welcome and business friendly, it is doubtful whether this is consistent with Section 186 (3).

XII 12.14 (1) For the purposes of first proviso to sub-section (1) of section 188,

(i) a company having a paid-up share capital of rupees one crore or more shall not enter into a contract or arrangement with any related party; or

(ii) a company shall not enter into a transaction or

transactions, where the transaction or transactions to be

Drafting

In sub-rule 1(ii), after the word “transactions” add

To maintain consistency between clause (i) and (ii)

33




entered into

(b) relates to appointment to any office or place of profit in the company, its subsidiary company or associate company at a monthly remuneration exceeding one lakh rupees as mentioned in clause (f) of sub-section (1) of section 188; or

the words “with any related party”

In sub-rule (1)(ii)(b), replace the word “one lakh rupees” with word “two lakh fifty thousand”

The existing limit is Rs. 2,50,000 as per the existing MCA circular.

XII Payment to director for loss of office, etc. in connection with transfer of undertaking, property or shares 12.16. (1) For the purposes of sub-section (1) of section 191, no director of a company shall receive any payment by way of compensation in connection with any event mentioned in sub-section (1) unless the following particulars are disclosed to the members of the company and they pass a resolution at a general meeting approving the payment of such amount:- (a) name of the concerned director

(b) amount proposed to be paid;

(c) event due to which compensation is payable;

(d) date of Board meeting recommending such payment;

(e) basis for the amount determined;

(f) reason/justification for the payment;

(g) manner of payment - whether payable in cash or

Needs clarity Section 191 must be clarified under the Removal of difficulty section 470. The provision/sentence of section 191 does not give any meaning. It should be clarified whether; the words “receive any payment ……. In general meeting” are common for sub-clause (a) and (b) or not. Further, 1(b) (iv) i.e. “any other offer which is conditional on acceptance to a given extent” may

34




otherwise and how;

(h) if payment is made other than in cash, valuation of such consideration by a registered valuer;

(i) sources of payment; and

(j) any other relevant particulars as the Board may think fit.

also be clarified as it does not give a meaning.

XVIII

Notice by the Registrar to the company for removal of name from Register of Companies.

18.1. (2) Following companies, are not eligible for taking action by the Registrar under these rules:-

Drafting

Since there is no prescriptive power under the section 248, it is doubtful if rule 18.1 is permissible under Section 248(1).

In sub-rule (2), the first line should be replaced with the following:

“Without prejudice to the provisions in rule 18.1 (1), the Registrar of Companies shall not send

35




(iv) Companies where inspection or investigation is ordered and being carried out or yet to be taken up or where completed prosecutions arising out of such inspection or investigation or pending in the Court;

(vii) Companies accepted Public Deposits which are either outstanding or the company is in default in repayment of the same;

notice under section 248 (1), in respect of the following companies”

In sub-rule 2(iv), in the last line the word ‘or’ may be replaced by the word ‘are’.

In sub-rule 2(vii), after the word “companies” insert “which have”

XVIII (2) The application in Form No. 18.2 shall be accompanied by: (i) Indemnity bond duly Notarized by every director in Form No. 18.3; and

(ii) A statement of accounts containing assets and liabilities of the company made up to a day, not more than seven days before the date of application and certified by a chartered accountant.

(iii) An affidavit in Form 18.5 should be sworn by every director of the company before a first class Judicial Magistrate or Executive Magistrate or Oath Commissioner or Notary to the effect that –

36




(a) Extinguished all its liabilities;

(b) Filed up to date financial statements and annual returns;

(c) Company is not in operation or doing any business;

Drafting

Drafting

Drafting

In sub-rule (2)(iii)(a) of rule 18.2, insert the words “it has” at the beginning

In sub-rule (2)(iii) of rule 18.2, delete the following item (b):

“(b) Filed up to date financial statements and annual returns;”

Insert the following as item (iv) after sub-rule (2) (iii):

“iv) Copy of the last filed financial statement, if any”And also do the renumbering.

37




(d) No dues towards income tax or sales tax or central excise or banks and financial institution or public deposits or any other Central Government or State Government Departments or authorities or any local authorities;

(vi) Copy of the Special Resolution or consent of seventy five per cent number in terms of paid up share capital

Drafting

Drafting

In sub-rule (2)(iii) of rule 18.2, delete the following item (d)

(d) No dues towards income tax or sales tax or central excise or banks and financial institution or public deposits or any other Central Government or State Government Departments or authorities or any local authorities;

Sub-rule 2(vi) should be redrafted as under:-

(vi) Copy of the Special Resolution or consent of members holding seventy five per cent paid up share capital

38




XVIII Manner of publication of notice: 18.4. (1) For the purposes of sub-section (4) of section 248, a notice prescribed under sub-section (1) or sub-section (2) of section 248 shall be: (i) published at least once in English language in a leading English newspaper and at least once in vernacular language in a leading vernacular newspaper having wide circulation in the State in which the registered office of the company is situated within thirty seven days of issue of notice under sub-section (1) of section 248 or receipt of completed application in Form No. 18.2 under sub-section (2) of section 248, as the case may be; and

(4) The Registrar of Companies shall, within fifteen days forthwith, intimate the concerned regulatory authorities regulating the company, if any, Income Tax authorities, Central Excise authorities and Service Tax authorities having jurisdiction over the company , the Chief Secretary of the State where the registered office of the company is situated, about the issue of such notice under sub-section (1) or sub-section (2) of section 248 by way of a Letter of Intimation along with such notice for comments/ objections, if any, within thirty days from the date of issue receipt of such Letter of Intimation.

Drafting In sub- rule (1)(i), replace the word “thirty seven” with the word “thirty”

Under sub-rule (4), in the last line delete the word “receipt”

Under sub-rule (4), insert the following sentence at the end:-

If no comments or objections are received within 30 days form the respective authority, it shall be presumed that

To bring clarity

39




(5) Registrar of Companies shall put names of the companies to whom Notice has been issued under sub-section (1) or sub-section (2) on the Ministry’s web-site. (i) The Registrar of Companies shall maintain and place on its website, the list of Companies to whom the notice under sub-section (1) of section 248 has been issued and from whom notice under sub-section(2) of section 248 have been received.

they have no objections or comments to make.

Under sub-rule (5)(i), in the second last line replace the word “notice” with the word “application”

Under sub-section (2) of section 248 the word application is used.

XXVII NCLT RULES17) “Digital signature” means authentication of any electronic record by a subscriber by means of an electronic method or procedure in accordance with the provisions of section 3 of the Information Technology Act, 2000 and includes a graphic image of a handwritten signature;

Re- Draft Digital signatures need not be defined in the NCLT rules as it is defined in the Information Technology Act, 2000.

XXVII NCLT RULES (40) “Registrar of Companies” includes Additional Registrar, Joint Registrar, Deputy Registrar or an Assistant Registrar.

Re- Draft Rule 2(40) Registrar of Companies should not be defined in NCLT Rules as it is already defined the Act.

There should be no duplicity between the two.

40




XXVII NCLT RULES (46) “Secretary" means Secretary to the Tribunal and in the absence of Secretary, such other officer of the Tribunal to whom the powers and functions of the Secretary be delegated.

Re- Draft Rule (46) the word “secretary” must be changed to “secretary to the Tribunal”

Secretary is already defined in the Companies Act, 2013. There should be no duplicity between the two.

Suggestions to the Ministry of Corporate Affairs (MCA) on Companies Rules, 2013:-

41


Chapter VIRule No. Provisions Suggestions / Suggested draft of

the Revised ClauseJustifications / Comments

Rule 6.1(3)(e) Registration of creation or modification of charge.

The charges requiring registration under this rule are:

(e) a charge, not being a pledge, on any movable property of the company;

(e) a charge on any movable property of the company;

Intention of the legislature seems to include registration of pledge on any movable property of the company;

The list given under rule 6.1(3) should be deleted and if not an explanation to be provided that it will be an inclusive list, not exhaustive one.

Chapter IIRule No. Provisions Suggestions / Suggested draft of

the Revised Clause Final Justifications

Rule 2.2 The OPC is required to file various Forms in regard to Consent, Nomination and / withdrawal of nomination in Form 2.3, Form 2.4 & Form 2.5.

E-Form 2.3, Form 2.4, Form 2.5 & Form 2.6 of the Draft Rules relating to OPC should be clubbed into One Form by giving option of radio button and Format of disclosure / consent, etc. should be provided into e-Forms instructions and should be allowed to be filed as an Attachment to this Form.

This will be similar to existing Form 52 relating to Foreign Company.

1) This will ensure consolidation of various Forms into one and avoid multiplicity and confusion for One Person Company, which will be operated by very small business person, will not be having much resources and assistance.

2) Cost saving for small entrepreneurs

3) Time saving without loss of any benefits.

Rule 2.4 Conversion of OPC:

2.4(1) In exercise of the powers conferred by sub-section (1) of section 469, (1) Where the paid up share capital of a One Person Company exceeds fifty lakh rupees or its average annual turnover during the relevant period exceeds two crore rupees, it shall cease to be entitled to continue as a One Person Company.

(2) Such One Person Company shall be required to convert itself, within six months of the date on which its paid up share capital is increased beyond fifty lakh rupees or the last day of the relevant period during which its average annual turnover exceeds two crore rupees or the close of the financial year during which its balance sheet total exceeds one crore rupees, as the case

In Rule 2.4(1) the criteria for conversion is “…….paid up share capital of a One Person Company exceeds fifty lakh rupees or its average annual turnover during the relevant period exceeds two crores rupees …….”

However, in Rule 2.4(2) the criteria is “……….paid up share capital is increased beyond fifty lakh rupees or the last day of the relevant period during which its average annual turnover exceeds two crore rupees or the close of the financial year during which its balance sheet total exceeds one crore rupees……..”

The criteria for balance sheet total of Rupees one Crore either be deleted from Rule 2.4(2) or it should be included in Rule 2.4(1).

Rule 2.4(1) & Rule 2.4(2) seem to be in contradiction to each other and should be suitably modified.This rule should be deleted in public interest because it is providing for automatic conversion after crossing the certain limit by the OPC.

Overarching power is exercised by the central government they are surpassing the parliament.

No provision is there in the act for such conversion.

Its like letting a child to remain as a child and not letting him to become an adult.

It is against the fundamental law making i.e. limit on subordinate legislation.

Can you travel beyond stated objectives?

42


Chapter IXRule No. Provisions Suggestions / Suggested draft of


Rule 9.5(6), Form 9.4

Certificate by Chartered Accountant in practice

I declare that I have been duly engaged for the purpose of certification of this form. It is hereby

Certificate by Chartered Accountant / Cost Accountant / Company Secretary in practice:

I declare that I have been duly engaged for the purpose of certification of this form. It is hereby certified that I have gone through the

The certification should be allowed all the professional, as this certification is relating to certification of compliances of the Order of the Tribunal, which all the professionals are capable of doing.

43


certified that I have gone through the provisions of the Companies Act, 2013 and Rules thereunder for the subject matter of this form and matters incidental thereto and I have verified the above particulars (including attachment(s) from theoriginal records maintained by the Company/applicant which is subject matter of this form and found them to be true, correct and complete and no information material to this form has been suppressed. I further certify that;

a) The said records have been properly prepared, signed by the required officers of the Company and maintained as per the relevant provisions of the Companies Act, 2013 and were found to be in order;

a) The company has prepared the revised financial statemen

provisions of the Companies Act, 2013 and Rules thereunder for the subject matter of this form and matters incidental thereto and I have verified the above particulars (including attachment(s) from theoriginal records maintained by the Company/applicant which is subject matter of this form and found them to be true, correct and complete and no information material to this form has been suppressed. I further certify that;

a) The said records have been properly prepared, signed by the required officers of the Company and maintained as per the relevant provisions of the Companies Act, 2013 and were found to be in order;

a) The company has prepared the revised financial statements and/or revised Board of

44


ts and/or revised Board of Directors report precisely as approved by the Tribunal vide order quoted herein above and no deviations have been made therefrom.

b) All the required attachments have been completely and legibly attached to this form;

Signature

Chartered Accountant in practice whether Associate or Fellow

Directors report precisely as approved by the Tribunal vide order quoted herein above and no deviations have been made therefrom.


Signature

Chartered Accountant/Cost Accountants / Company Secretary in practice whether Associate or Fellow

45


Chapter IX (CSR Rules)Rule No. Provisions Suggestions / Suggested draft of


Rule 3 (d) ‘Net Profit’ for the section 135 and these rules shall mean, net profit before tax as per books of accounts and shall not include profits arising from branches outside India.

‘Net Profit’ for the section 135 and these rules shall mean, net profit After tax as per books of accounts and shall not include profits arising from branches outside India.

The allocation of funds for CRS activities are in the nature of appropriation and it is basic principle of accounting and also of Law is to have appropriation after payment of taxes. Earmarking the Funds for CSR activities before Taxes will amount to taking away the profits of the stakeholders even before payment of tax.

Rule 6 Companies may collaborate or pool resources with other companies to undertake CSR activities and any expenditure incurred on such collaborative efforts would qualify for computing the CSR spending.

Companies may collaborate or pool resources with organizations / Banks / Companies, holding or subsidiary, as the case may be, to undertake CSR activities and any expenditure incurred on such collaborative efforts would qualify for computing the CSR spending.

In order broaden and felicitate the CSR activities by the Corporate, it would be justified to include collective CSR activities with other form of organisation such as Banks, Societies, Trusts, etc.

46


Chapter XIRule No. Provisions Suggestions / Suggested draft of


Rule 11.13 Return of Resignation:

For the purposes of proviso to sub-section (1) of section 168, where a director resigns from his office, he may within thirty days from the date of resignation, forward to the Registrar a copy of his resignation along with reasons for the resignation in Form No. 11.7 ………..

Word “may” need to be replaced with “shall”.

The word “may” used in the rules not inconsonance with proviso to section 168(1) of the Act.

47


Chapter XIIRule No. Provisions Suggestions / Suggested draft of


Rule 12.1(9) From the commencement of the meeting until the conclusion of such meeting, no person other than the Chairperson, directors, Secretary and any other person whose presence is required pursuant to a legal provision shall be allowed access to the place where any director is attending the meeting either physically or through video conferencing or other audio visual means.

Management representatives as may be authorized by the Board / Committee of the Board should be allowed an access to the place where the directors, etc. are attending the Board / Committee Meeting either physically or through video conferencing or other audio visual means.

This will allow flexibility to the Board to invite functional heads of the Company in the Board and committee meetings, as per the requirement of respective agenda of the meeting.

It is to restrictive and the power will be left with the board that who shall come in the conference, who cannot. Flexibility should be there.

Pursuant to legal provision should be deleted or an explanation should be in regard to this.

48


Chapter XVIIIRule No. Provisions Suggestions / Suggested draft of


Rule 18.2 (Form 18.2)

An application in Form No. 18.2 along with fee as prescribed in Annexure C for removing its name from the register of companies on all or any of the ground(s) specified in sub-section (1) of Section 248.

Form 18.2 - Certificate by Chartered Accountant in practice

Certificate by Chartered Accountant / Cost Accountant / Company Secretary in practice whether Associate or Fellow.

Membership No. and also CP No.

The practising professionals are required to declare he has gone through the provisions of the Companies Act, 2013 and Rules thereunder verified the particulars of Form, from the original records maintained by the Company and found them to be true, correct and complete and no information material to this form has been suppressed.

He further certify that;a) The said records have been properly prepared, signed by the required officers of the Company and maintained as per the relevant provisions of the Companies Act, 2013 and were found to be in order;


c) It is understood that I shall be liable for action under Section 448 of the

49


Companies Act, 2013 for wrong certification, if any found at any stage.

The above declaration are in the nature of Compliance of provisions of Companies Act, 2013 and verification of related record, which can be done by Company Secretary in Practise, as it is there in regard to all other Forms.

50


Chapter XIXRule Number Provisions Suggestions Justification

Rule 19.7 19.7 (1) For the purposes of sub-section (1) of section 259, a databank shall be maintained by the Central Government or any institute or agency authorized by the Central Government by an order consisting of the names of company secretaries in practice, chartered accountants in practice, cost accountants in practice and such other professionals as may be approved by the Central Government.

The Central Government may through Rules authorized professional Institutes constituted under the Act of parliament such as ICSI / ICAI / ICWAI, as recognized Institution for maintaining data bank if Interim or Company Administrators.

The respective Institution, once authorized may start some certification or Post Membership Qualification (PMQ) courses on Law relating to Insolvency or Revivals and start maintaining the databank of the their members, who will have adequate ability, integrity and standing, special knowledge or experience in matters related to revival and rehabilitation of sick companies or insolvency.

In Rule 19.7(1) it is given “by an order of central government” but in the act under section 259(1) it is given “as specified by notification”.

It is provided that central government may constitute institutes for maintaining data bank for company administrators so, we(ICSI)provide for our candidature for maintaining databank as a responsible authority

51


Chapter XXVII (NCLT Rules)Rule Number Provisions Suggestions Justification

Rule 25 of Chapter XXVII Rights of a party to appear before the Bench

Rule 25 (2) A party may, in writing, authorize an Advocate or a Company Secretary in practice or a Chartered Accountant in practice or Cost Accountant in practice, to function as a representative of such party. A company may appoint and authorise its directors or company secretary or CFO or CEO or manager all under the Act to appear, in its behalf, in any proceedings before the Bench. The Central Government, the Regional Director or the Registrar of Companies or

In rule 25(2) words “chartered accountants or company secretaries or cost accountants or any other person” should be added after the words …………..“an Advocate”

Section 432 of the Companies Act, 2013 relating to Right of Legal Representation which is as under:

“A party to any proceeding or appeal before the Tribunal or the Appellate Tribunal, as the case may be, may either appear in person or authorise one or more chartered accountants or company secretaries or cost accountants or legal practitioners or any other person to present his case before the Tribunal or the Appellate Tribunal, as the case may be.”

The plain reading of the provisions of

52


Official Liquidator may authorise an officer or an Advocate. The Company Liquidator shall make his appearance in person.

Rule 25(3) - The officer authorized by the Central Government or the Regional Director or the Registrar of Companies or the Official Liquidator should be an officer not below the rank of officers of Senior Time Scale. In the case of the Company Secretary in practice or chartered accountants in practice or cost accountant in practice should have post qualification experience of five years.

In rule 25(3) following shall be deleted:

“………..In the case of the Company Secretary in practice or chartered accountants in practice or cost accountant in practice should have post qualification experience of five years”.

section 432 gives right to the party concerned (aggrieved or affected) to have legal representation from any of the professionals authorized in the section itself. The Law even provides any other person also to be appointed as Legal Representative.

Use of the words “5 years post qualification experience” in the rule 22(2) and 25(3) of NCLAT and NCLT Rules are in direct violation of express provisions of Section 432 so it is ultra-virus the Act.

The representation of MCA, RD and ROC through advocate only before NCLT is also violation of Section 432 and so it is ultra-virus to the Act.

The intent of the Law seems to provide equal rights to all the professionals to be appointed for providing legal representative services to the affected party/parties.

Creating class within class will also be violation of “right to equality” and “to practise any profession”

By the above it is concluded

53


that:1. Section 432 is a complete provision;2. No scope of prescription by rules;3. Rules cannot affect the right of a party for choosing representations and professionals;4. Rules cant restrict any profession from representation For eg. Securities Appellate Tribunal (SAT) is a higher authority than NCLT which does not provide year eligibility for representation So how can NCLT?5. In the view of Constitution of India it can be said that fundamental rights are being violated with reference to Article14, Article19(1)(g) and Article 20 read with Legal

54


Practitioners Act, Advocates Act, Company secretaries Act, Chartered accountant Act etc

Rule 145 of NCLT Rules

(a) Saved as other provided in the Act, if any person intentionally gives false evidence upon an examination on oath of Solomon affirmation he shall be punishable with imprisonment for a term which shall not be less than three years but which may extent to seven years and with fine which may extent to ten lakhs of rupees in accordance with section 449 of the Act.

Second line “On oath or solemn affirmation” instead of “on oath of Solomon affirmation”– 4th lines – “extend” instead of “extent”.

This seems to be the inadvertent drafting error.

55